Oil prices fall as market eyes US-Russia talks on Ukraine

[BEIJING] Oil prices fell in early Asian trading on Monday, extending declines of more than 4 per cent last week on higher US tariffs on its trading partners, an Opec output hike, and expectations the US and Russia were moving closer to a Ukraine ceasefire pact.

Brent crude futures fell 52 cents, or 0.78 per cent, to US$66.07 a barrel by 0041 GMT, while US West Texas Intermediate crude futures fell 58 cents to US$63.30.

Expectations have risen for a potential end to sanctions that have limited the supply of Russian oil to international markets, after US President Donald Trump said on Friday that he would meet with Russian President Vladimir Putin on Aug 15 in Alaska to negotiate an end to the war in Ukraine.

The news came as the US has stepped up pressure on Russia, raising the prospect that penalties on Moscow could also be tightened if a peace deal isn’t reached.

Trump set a deadline of last Friday for Russia to agree to peace in Ukraine or have its oil buyers face secondary sanctions, and at the same time is pressing India to reduce purchases of Russian oil.

On top of US-Russia talks, US inflation data on Tuesday will be another key price driver this week, IG market analyst Tony Sycamore said in a note.

“A weaker-than-expected CPI print would boost expectations for earlier and deeper Fed interest rate cuts, which would likely stimulate economic activity and increase crude oil demand.”

“Conversely a hotter print would spark stagflation fears and push back expectations of Fed rate cuts.”

Trump’s higher tariffs on imports from dozens of countries, which took effect on Thursday, are expected to weigh on economic activity as they force rerouting of supply chains and higher inflation.

Dragged down by the gloomy economic outlook, Brent fell 4.4 per cent over the week ended Friday, while WTI dropped 5.1 per cent. REUTERS